Business on Main reports from the Ernst & Young Strategic Growth Forum with tips on how entrepreneurs can help the government assist small businesses in America.
We’ve just emerged from a hard-fought, tough-talking campaign season, where both sides claimed to be the party that would best help the nation’s small-business owners. Lots of promises were made — it remains to be seen which will be kept.
Even within the entrepreneurial ranks there was disagreement. Some business owners claimed they didn’t need or want anything from the government, while others were more open to government assistance. These discordant points of view were on display several weeks ago at the annual Ernst & Young Strategic Growth Forum, held in Palm Desert, California. The conference is a gathering of some of the best and brightest business minds from around the world, culminating in the crowning of the Ernst & Young Entrepreneur of the Year.
After last year’s event, some entrepreneurs asked Ernst & Young to help them conquer the divide between business and government. As entrepreneurs, they weren’t content to sit back and see what would happen, preferring to seize the reins and drive headlong into the world of public policy. Three entrepreneurs and Francisco J. Sánchez, under secretary for international trade at the U.S. Department of Commerce, were on hand at this year’s conference to discuss their efforts, frustrations and triumphs.
Leah Brown, president and CEO of A10 Clinical Solutions, leaped into the fray, acknowledging the “disconnect between Congress and business.” Barry Silbert, founder and CEO of SecondMarket, an investment company, also experienced the great divide, saying, “As CEOs, we want to get things done. But in D.C., about one in 10 [in government] knows anything about creating and growing a business.” However, he added, “It’s easy [for entrepreneurs] to get access.” And that’s exactly what he did.
An entrepreneur goes to Washington
Silbert, like Mr. Smith of legendary movie fame, went to Washington. He didn’t run for office, but he did make a difference. “We can all make a change,” he says, “but it takes a lot of time and costs a lot of money.” Silbert focused on a rule that restricted the number of shareholders a private company could have to 500. He claimed this forced many companies, such as Google, to go public before they wanted to.
He started his quest in December of 2010. Here’s his tally of what it took:
- 27 personal visits to Washington, D.C.
- 63 trips to D.C. by his team
- 72 calls with lobbyists
- 130 congressional meetings (including 45 meetings with congressional staffers and 35 with members of Congress)
- 16 meetings with the White House
- 31 “other” meetings (with think tanks, associations, etc.)
- 3 congressional hearings
- $55,000 in campaign donations
- $352,500 spent on lobbyists
But Silbert claims it was all worth it when President Obama signed the JOBS Act this past April, which included provisions raising the allowed number of stockholders to 2,000 (not counting employees). “If you want to make an impact,” he says, “go to D.C. and get to know the staffers.” Under Secretary Sánchez agrees that if entrepreneurs want results, they should head to D.C. But don’t come alone, Sánchez advises, saying, “There’s power and strength in numbers.” And don’t just complain — “Come offering solutions.”
Revisiting the ‘regulatory burden’
Another classic divide between government and business is the issue of regulation. Many businesses insist there’s too much regulation, and Sánchez says President Obama agrees. The president instituted a “look back” program, instructing all federal agencies to examine their regulations and assess which could be eliminated or reduced. So far, 100 changes have been made (including eliminating a staggering 30 million forms from the Department of Transportation) and 500 additional changes have been submitted, with more to come, according to Sánchez.
But reality (the BP oil disaster, for example) makes it difficult to make the case that there shouldn’t be any government regulations. While acknowledging that “paperwork is a burden for small businesses with small staffs,” Leah Brown also believes “some regulatory burden is necessary, because there are some bad people doing bad things.” She adds, “And when that happens in my industry, good people die.”
Silbert says “the government is ripe for disruption.” And Sánchez is optimistic changes will come, because now that the election is over, “there’ll be less political rhetoric, and the stakes are very high.” The administration, says Sánchez, is pushing for more businesses (particularly small ones) to start exporting (we’re already exporting $100 billion in goods to China alone), and fighting to protect American companies’ intellectual property rights in foreign nations.
To be sure, there are still a lot of issues on the table. Another panelist, clean-tech entrepreneur Christina Lampe-Önnerud, B.Sc., Ph.D., says energy entrepreneurs are fleeing to China, and their investors are following. Brown says her biggest issue is finding staff with the specific expertise she needs at pay rates that are competitive with China and India. And Silbert is concerned about making sure the JOBS Act gets implemented.
From the government’s perspective, Sánchez says they’re focusing on “getting the country’s fiscal house in order; investing in education, information, and infrastructure; immigration reform; and lowering trade barriers so we can remain globally competitive.” There’s likely to be a lowering of corporate tax rates as well.
So can the government and the entrepreneur be friends? Sánchez says yes, and advises entrepreneurs who want change to start by engaging with politicians on the local and state level. Brown agrees, acknowledging the “extraordinary opportunity entrepreneurs have as the catalysts of future growth.”
She adds, “As entrepreneurs, we have the spirit and motivation to get through difficult times. [Borrowing from] President John F. Kennedy: Stop asking what our country can do for you, but do something for our country.”